14% -- The Most Important Number for Stocks

With stocks hitting new highs, is the current boom in corporate profitability sustainable?

Corporate profits have recently accounted for 14.2% of income generated in America -- a record high. The average since 1929 has been 10.1%. With stocks hitting new highs, the key to deciding whether prices are still attractive hinges on whether the corporate profit boom is sustainable, and for how long.

That's because the Standard & Poor's 500 index (ticker: SPY) of large U.S. companies trades now at just under 15 times trailing earnings, its average historical valuation. An investor paying average prices has reason to...